Here's Why You Shouldn't Panic as 10-Year Treasury Yield Tops 3%

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Yields on 10-year Treasuries hit the widely watched and psychologically significant 3 percent level Tuesday for the first time since January 2014, continuing a months-long climb that has been driven by expectations of rising inflation and the possibility that the Federal Reserve might quicken its pace of rate hikes in response.

Higher interest rates increase the cost of government borrowing, making it more expensive to service the growing national debt.

The cost of interest on the debt is projected to grow more quickly than any other major component of the federal budget, according to the Congressional Budget Office, which estimated this month that spending on interest payments will nearly triple by 2028, rising to $915 billion that year.

CBO projected that net interest costs will grow larger than the defense budget by 2023 and exceed non-defense spending by 2025.

As editor in chief, Yuval Rosenberg oversees all aspects of The Fiscal Times' website and email newsletter. His writing has appeared in publications including BusinessWeek, CNBC.com, CNNMoney.com, Fast Company, Fortune, Newsweek, Money and Time.